Cullumber Company purchased a delivery truck for $48,000 on July 1, 2022. The truck has an expected salvage value of $10,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Cullumber uses the straight-line method of depreciation. Prepare the journal entry to record 2022 depreciation.

Question

Abigail

Business

30 April, 01:25

Cullumber Company purchased a delivery truck for $48,000 on July 1, 2022. The truck has an expected salvage value of $10,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Cullumber uses the straight-line method of depreciation. Prepare the journal entry to record 2022 depreciation.

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Loki · Answer 1

Cullumber Company depreciation for the year 2022 = $2,375

Journal Entry for 2022

Dr Cr

Depreciation expenses $2,375

Accumulated Depreciation $2,375

Explanation:

annual depreciation on straight line = Cost - slavage value

life span

= ($48,000 - $10,000) / 8

= $38,000/8 = $4,750

but the company purchase the asset on July 1, therefore half year depreciation will be charged = (6 * $4,750) / 12 = $2,375